As taxes increase and inflation erodes our savings, it has become very conventional in recent years for individuals to maximise their tax refunds through basic tax and financial planning.
Here are the ways in which I can help you potentially reduce your tax burden or increase your tax refund.
- Medical Aid Contributions: Here are the medical tax credit rates for the 2021/2022 tax year:
- R332 per month for the taxpayer and main member of the scheme
- R332 per month for the first dependant
- R224 per month for each additional dependant.
- Retirement Annuity Contributions:
Contributions to a Retirement Annuity up to 27.5% of your annual income (maximum of R350 000) can be deducted from your tax liability.
Example: Income of R800k, R800k x 27.5% = R220 000 maximum allowed contribution for tax deduction.
These contributions can be made monthly or as an annual lump-sum. It’s a great way to save for retirement while reducing your annual tax liability.
- Tax free Investments:
These investments are free of interest, dividends and capital gains. This means that you can invest without paying a cent in tax.
Contributions are however limited to R36 000 annually and R500 000 over an individual’s lifetime.
You can withdraw money from this investment as you wish, but any new contributions will count towards the above limits.
Of course there are many other ways you can reduce your tax liability through your accountant. Examples include commission expenses, donations, business travel, etc. Remember that these type of claims have qualifying criteria and your accountant will be able to advise you.
Ruvan J Grobler RFP™
*This content serves as factual information and not as financial advice.